Gramercy Distressed Opportunity Fund LLC expressed its objections to the provisions of the court-appointed auctioneer for CITGO, claiming that they grant excessive “free of burdens” protection to the buyer, extending beyond the shares of PDV Holding Inc., the owner of the Venezuelan refinery.
This position was outlined by Gramercy in response to an objection submitted by the 2020 bondholders in the case of Crystallex International Corp. against the Bolivarian Republic of Venezuela. They emphasize that they do not oppose the sale of PDVSA shares in PDVH but specifically object to certain provisions of the proposed sale order by Robert B. Pincus, which would grant excessive “free of burdens” protection to the buyer, beyond the CITGO shares themselves.
Gramercy argues that the order should not affect creditors’ rights over the assets of PDVH or its subsidiaries. Therefore, they propose a revised sale order that corrects these deficiencies broadly, instead of creating limited exceptions solely for the 2020 bondholders.
Excessive Protections
On August 4, 2025, Gramercy Distressed Opportunity Fund LLC submitted its response to the District Court of the United States for the District of Delaware concerning the objection from the 2020 bondholders regarding the final recommendation of the court-appointed auctioneer for CITGO, Robert B. Pincus.
Gramercy states that it does not oppose the auctioneer’s final recommendation or the proposed buyer but agrees with the PDVSA 2020 bondholders that certain provisions of Pincus’s order exceed or may be interpreted as an overreach of the court’s authority.
Specifically, they argue that these provisions attempt or could be seen as granting the buyer “free of liens and burdens” protections that extend beyond the PDVH shares themselves, covering the assets of PDVH and its subsidiaries.
Key Points and Gramercy’s Arguments
Gramercy’s central argument is based on the fundamental legal principle that a sale of corporate shares is distinct from a sale of the corporation’s assets. In this context, they cite previous rulings: “‘PDVH shares free and clear of all liens and obligations’ means ‘PDVH shares free and clear of all claims, liens, and obligations associated with the PDVH shares themselves.’
They argue that the proposed order by the auctioneer overreaches by attempting, or seemingly attempting, to provide the buyer with additional and unwarranted “free of liens and burdens” relief over PDVH’s or its direct and indirect subsidiaries’ assets, not just regarding the PDVH shares.
Gramercy’s Objections and Corrections
The main points of objection and proposed corrections by Gramercy are as follows:
Scope of “free of liens and burdens”:
Gramercy emphasizes that the court’s in rem jurisdiction only applies to PDVH shares. Any attempt to extend “free of liens and burdens” relief to PDVH’s assets or its subsidiaries is inconsistent with applicable law and the court’s previous orders.
Definitions of “buyer” and “buyer’s affiliates”:
The definitions should be clarified to exclude from the successor liability protections not just PDVH and its subsidiaries but also their respective successors and assigns by merger or otherwise.
Preservation of PDVH and subsidiaries creditors’ rights:
The proposed order should preserve the rights of any creditor of PDVH or its subsidiaries to assert their rights against such entities. This includes the right to proceed against PDVH and/or its subsidiaries to establish or enforce claims, as well as the right to contest asset transfers under fraudulent conveyance laws or similar regulations.
Questioning Transfers Related to Financing
Gramercy believes that provisions limiting PDVH and its subsidiaries creditors’ rights to challenge transfers related to the financing of the sale under applicable law overreach and should be removed, not just excepted for the PDVSA 2020 bondholders.
To avoid future ambiguities, Gramercy proposes a general exclusion clause in the proposed order: “Notwithstanding any provision herein, nothing in this Order shall affect the right of any person or entity to assert and enforce a claim against the assets of PDVH or any of its direct and indirect subsidiaries and their respective successors and assigns, by merger or otherwise, along with the related rights as a creditor of such entities.”
Differences with the Bondholders’ Proposal
Gramercy acknowledges that the PDVSA 2020 bondholders also identified the overreach in the auctioneer’s proposed order. However, they believe the bondholders’ proposal inadequately addresses the issue by merely excluding the PDVSA 2020 bondholders from such provisions.
In contrast, Gramercy proposes corrections that apply to all parties broadly, maintaining the principle that rights over PDVH assets should not be affected by the sale of its shares. Nonetheless, they do not object to including specific exclusions for the PDVSA 2020 bondholders in the sale order if they seek such additional security measures.
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